# Bank of Israel Expected to Keep Cutting as Tel Aviv Property Stocks Rally

A postwar easing cycle lifts real estate shares even as a once-celebrated company in Israel's auto-technology sector seeks protection from creditors.

- Published: 2026-07-06T10:15:48.597Z
- Canonical: https://polylog.news/2026-07-06/bank-of-israel-expected-to-keep-cutting-as-tel-aviv-property
- Publisher: Polylog (Global desk)
- Section: markets
- Sources: [Globes](https://www.globes.co.il/news/article.aspx?did=1001547894#utm_source=RSS), [Globes (REE)](https://www.globes.co.il/news/article.aspx?did=1001547884#utm_source=RSS)

Israeli real estate stocks advanced on Monday ahead of a Bank of Israel decision that lowered interest rates for a second consecutive meeting, according to [Globes](https://www.globes.co.il/news/article.aspx?did=1001547894#utm_source=RSS). The central bank cut its benchmark by 25 basis points to 3.50 percent, its lowest level since 2022, following an earlier reduction on May 25, part of an easing cycle that resumed once a ceasefire took effect, per the [Bank of Israel](https://www.boi.org.il/en/communication-and-publications/press-releases/25-05-2026/) and [Ynetnews](https://www.ynetnews.com/article/fj34v983v). Governor Amir Yaron said the rate could keep falling to at least the 3 percent range if inflation stays contained, pointing to lower energy prices tied to the understanding between the United States and Iran. The banks index eased while property names climbed, led by G City and its parent Norstar after Ari Real Estate announced a purchase of G City shares at a 30 percent premium.

  Not every part of the market is benefiting. The auto-technology company REE, which listed on a US stock market less than five years ago and once drew comparisons from its own chief executive to the chipmaker Intel, has filed for a stay of proceedings, [Globes](https://www.globes.co.il/news/article.aspx?did=1001547884#utm_source=RSS) reported. The firm owes more than 50 million shekels, including roughly 12 million to employees, and has spent more than a billion dollars since its founding.

  The contrast is instructive. Falling rates are reviving property and rate-sensitive sectors, while a company built on cheap capital during the era of near-zero rates is now insolvent. From an Austrian perspective, the failure is not an accident but the delayed cost of investment made when money was artificially cheap, surfacing as the cycle turns.

## What this means

Israel is early in a postwar rate-cutting cycle that is lifting property and other rate-sensitive assets, but the collapse of a capital-intensive startup shows the cleanup from the cheap-money era is still under way. The two moves are connected, since both reflect an economy repricing the cost of capital.

## What to watch

- The Bank of Israel's rate decision and guidance, which set the pace of further easing and the support for property.
- Whether more firms funded during the near-zero-rate period file for protection, a sign of how much malinvestment remains to be worked off.
- The shekel's level, since faster cuts could pressure the currency and complicate the inflation picture.